UK's FRC revamps investor stewardship code
The Financial Reporting Council (FRC) has announced a significant overhaul of the UK Stewardship Code to prioritise value creation and engagement.
The updated UK Stewardship Code 2026 is set to take effect from 1 January 2026.
The revised code aims to foster long-term sustainable value creation for clients and beneficiaries while reducing the reporting burden for its nearly 300 signatories, who collectively manage approximately £50trn in assets.
Following an extensive consultation process involving over 1,500 stakeholders, the FRC has refined the code to enhance engagement between market participants and streamline reporting requirements.
The consultation began with preliminary discussions in February 2024, followed by a formal consultation period from 11 November 2024 to 19 February 2025, and incorporated insights from four years of reporting under the 2020 Code.
Key changes in the UK Stewardship Code 2026 include an updated definition of stewardship, which now centres on creating long-term sustainable value.
The code introduces fewer principles and shorter reporting prompts to replace detailed expectations, aiming to eliminate formulaic 'box-ticking' approaches.
Early evidence suggests signatories could reduce reporting volume by 20-30% without compromising quality.
The revised code offers a flexible reporting structure, allowing signatories to submit separate Policy and Context Disclosures and Activities and Outcomes Reports or combine them into a single document.
The Policy and Context Disclosure will only need to be submitted once every four years.
Additionally, the code now includes tailored Principles for different signatory types, such as asset owners, asset managers, proxy advisors, investment consultants, and engagement service providers, marking the first time the latter three groups have specific Principles.
To aid implementation, particularly for those managing non-equity asset classes, the FRC has introduced optional guidance with practical tips and examples.
The code operates within a regulatory framework alongside the Financial Conduct Authority's (FCA) oversight of financial markets, the Pensions Regulator's protection of member interests, and the Department for Work and Pensions' pension scheme regulations.
To facilitate the transition, 2026 will serve as a transition year, during which no existing signatories will be removed from the signatory list following their 2026 application.
The FRC will support signatories through publications, webinars, and bilateral discussions to ensure a smooth adoption of the new Code.
FRC CEO Richard Moriarty said: "The UK Stewardship Code 2026 provides signatories with a flexible principles-based framework that provides greater transparency on their stewardship in the face of unprecedented uncertainty.
'Extensive consultation confirmed strong investor backing for the code's importance and has directly informed the changes we have made to ensure it remains fit for the future. The updated code focuses on long-term sustainable value creation while cutting unnecessary reporting and improving engagement quality. New dedicated principles for proxy advisers increase transparency in the investment chain.
'The code is not prescriptive and does not direct how any signatory should choose to invest. It takes a principles-based approach which is focused on delivering a clear outcome of value creation for clients and beneficiaries.'
In May 2025, the FRC released a report on the NHS audit market, providing insights to aid the government's efforts in reforming the local audit system.
"UK's FRC revamps investor stewardship code " was originally created and published by The Accountant, a GlobalData owned brand.
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